Investment Window Opens After Letshego Share Split

MBONGENI MGUNI
Staff Writer | Monday April 19, 2010 00:00

The new price, down from P16.00, opens a new window to invest in a local group whose assets and profitability have ballooned since its establishment in 1998.

With the BSE requiring a minimum investment of 100 shares, the new share price means prospective shareholders will pay P160 for the minimum investment in Letshego today. This is down from P1, 600 prior to the share split.

From its listing in 2002, the rise in Letshego's share price has reflected the micro-lender's performance, enabling the company to become the fourth largest stock on the BSE's main board.

Letshego's success in Botswana has enabled the group to spread its wings to six African countries while growing its loan book to P1.68 billion. Letshego's simple formula - unsecured loans repaid from source - has proved a hit with civil servants and other formally employed people across its African footprint.

On Friday, the group's senior executives told The Monitor that the share split presented yet another opportunity for ordinary Batswana to leverage onto the success story that Letshego has become. Similar opportunities, such as the issue of 30 million new shares last year, have been over-subscribed by investors eager to tap into Letshego's winning formula, financial prowess and bright future.

Letshego Holdings Group Managing Director, Jan Claassen, said the share split was designed to enable investors to participate in the micro-lender's success by reducing the counter's share price.

'We are a local company and we consider the smaller investors,' Claassen said. 'We want a wider shareholding base and we also want to make it more affordable for these investors to have a share in Letshego.

'This is a Botswana company, it started in Botswana and Batswana are making it successful. We as management have to try and plough back whether through shares or through Corporate Social Responsibility. We need to show our gratitude. But this share split also makes sound business sense.'

The share split means Letshego shareholders prior to Thursday received 10 additional shares for every share they held. Stockbrokers Botswana analyst, Kgomotso Beleme, said the share split was an opportunity for investors.

'It certainly will open up Letshego for ordinary people,' she said. 'It's more affordable for more people who were not able to buy it.'

 Beleme said in the past, it was noted that while a share split reduces the share price, these start rising shortly afterwards due to demand pressure.

 'Often, what we have seen is that with the shares more affordable, there are more orders for the shares due to excitement and the price is then driven up. A few months after the split, we usually see a rise in the price of the counter until it settles at its fair value.'

 A BSE official confirmed, saying 'before the start of trade on Monday, Letshego's shares will be priced at P1.60'.

Letshego, among the top performers on the BSE, declared a dividend of 30thebe for the year ended January 2010, preferring to restrain the dividend and plough revenue back into expanding operations.

The group recorded an after tax profit of P380 million, representing an increase of 73 percent from the previous year.